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Strategies & Market Trends : Currents of Currency

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From: Ahda	11/27/2014 12:11:25 AM
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Happy Thanksgiving to all. According to the New York Federal Reserve's latest Household Debt and Credit report, household debt in the third quarter rose 0.7%, or $78 billion, to $11.71 trillion, up from $11.62 trillion in the second quarter. Overall, household debt is below its $12.68 trillion peak reached in the third quarter of 2008. "Outstanding household debt, led by increases in auto loans, student loans and credit card balances, has steadily trended upward in recent quarters," said Wilbert van der Klaauw, senior vice president and economist at the New York Fed. "In light of these data, it appears that the deleveraging period has come to an end and households are borrowing more." What is not stated here is that home ownership is down to 65% where it was 69 % 2008. Credit card debt has short term benefit. Housing in contrast can be viewed as a long term investment Credit card debt does not have the potential for an increase in price as does housing. Governments demand inflation so they can service debt. With that need for inflation you are apt to see an increase in house price. However with an increase in credit card debt you are looking at short term gain and a question as to what direction long term the economy is headed. We have seen expansion but part of that expansion has to do with low interest rates and ease of funding. That is changing now.

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